Posted on 24 September 2020
Feasibility study on the processing and sale of rubberwood to support smallholder financing in Indonesia.
HeveaConnect, Target Corporation, and WWF are engaged in finding solutions to enhance the production and trade of sustainable natural rubber. The three organizations came together in 2019 around the shared interest in understanding how the processing and sale of rubberwood might incentivize the adoption of sustainable practices by natural rubber smallholders and enhance their livelihoods.
We enlisted the services of Financial Access to analyze the potential of rubberwood to serve as a mechanism to support smallholder financing in Indonesia. Low yields are one of the main issues plaguing rubber smallholders in Indonesia, who are often forced to replace rubber with other commodities to improve their livelihoods. This has consequences for Indonesia’s dominant position in the rubber sector, farmers’ livelihoods and ability to rise out of poverty, and potentially drives deforestation as new land is often cleared to meet demand.
This report investigates the viability of selling rubberwood from the perspective of all stakeholders in the supply chain. We identify a financing scheme that has the potential to ensure that a smallholder avoids a cash shortfall during or after replanting. Although the scope of the analysis was limited to two provinces in Sumatra, the findings of this study could be used there and elsewhere in Indonesia to inform the development of sustainable natural rubber initiatives that include the processing and trade of rubberwood as one of several strategies to support equity in natural rubber supply chains.